Despite Several Recent Freezes, Anxiety Over Interest Rate Hikes Remains
Over the past two years, the domestic base interest rate has recorded a dramatic rise, deepening the sighs of demanders.
The problem is that the base interest rate, which has been frozen several times recently, may rise further in the future. This anxiety stems from concerns over US-originated interest rate hikes.
The domestic base interest rate is sensitive to changes in the US base interest rate. When the US base interest rate rises, the domestic base interest rate inevitably increases, differing only in the magnitude of the rise.
On November 9th, Jerome Powell, Chair of the US Federal Reserve (Fed), at an International Monetary Fund (IMF) hosted conference, dismissed recent market expectations of a rate cut by saying, "We should not be misled by the slowing inflation," and added, "If additional (rate) hikes are necessary, we will not hesitate," quashing hopes.
In fact, the US base interest rate was recently frozen twice consecutively at 5.25~5.5%, raising market expectations for a rate cut. However, Powell's remarks have dampened these expectations. After seven hikes last year, the domestic base interest rate has been frozen several times recently, leading to hopes for a cut soon, but now concerns about rate hikes have emerged.
With the base interest rate rising significantly over the past two years, loan interest rates have also surged. The mortgage loan interest rate, which was around 2.5% per annum two years ago, has more than doubled to about 5% this year. Moreover, the interim payment loan interest rate for pre-sale apartments has risen to the 6% range, doubling financial costs from loans over the past two years and increasing the burden on demanders.
As the financial cost burden intensifies, demanders' interest continues in new pre-sale complexes, including unsold units that offer financial benefits.
Beomeo Ja-i, which was pre-sold in Suseong-gu, Daegu, last July, remained unsold for over a year but recently reported a complete sell-out. Despite being located in Beomeo-dong, Suseong-gu, known as the Gangnam of Daegu, the apartment remained unsold for a long time due to market stagnation but found all buyers in the second half of this year with fixed contract deposits and full interest-free interim payments.
The Shop Soyang Star River, pre-sold in Chuncheon, Gangwon in October, and Chuncheon Kumho Eoullim The First, also pre-sold in Chuncheon in November, reduced the burden on demanders by offering interest-free interim payments, finishing subscription applications with first-priority competition rates of 31.44 to 1 and 18.45 to 1, respectively, with positive results.
An industry insider said, "Interest in complexes offering benefits that reduce burdens is inevitably increasing amid significantly higher interest rates," adding, "Especially since rates may rise further, the value of these complexes will increase."
‘The Shop Uijeongbu Station Link City,’ built by POSCO E&C on the Camp LaGuardia urban development site in Uijeongbu-dong, Uijeongbu-si, Gyeonggi Province, attracts attention by applying a deferred interest payment system, reducing the initial burden on early contract holders. Additionally, the interim payment interest rate is fixed at 3%, lower than the interim loan interest rates at other sites.
‘The Shop Uijeongbu Station Link City’ is a large apartment complex with 1,401 households, ranging from basement 3 floors to a maximum of 48 floors above ground. It offers a variety of types including △84㎡ with 1,058 households △112㎡ with 339 households △162㎡ with 2 households △165㎡ with 2 households, covering rare medium-to-large sizes in Uijeongbu.
With the return of Camp LaGuardia, formerly a US military base, about 30,000㎡ of parkland will be created as a public contribution under the urban development project conditions, providing convenience and contributing to local community development for Uijeongbu citizens. The park adjacent to the complex also offers a green infrastructure premium.
The transportation environment is excellent. It is within walking distance to Uijeongbu Station on Line 1, a major transportation network in Uijeongbu-si, and directly adjacent to Heungseon Station on the Uijeongbu light rail. Furthermore, the suburban line running from Neunggok Station in Goyang-si to Uijeongbu Station is scheduled to open next year, further improving transportation convenience. Notably, Uijeongbu Station is planned to open the GTX-C line, with construction starting this year and scheduled to open in 2028. Once completed, it will take only five stops to reach Samsung Station from Uijeongbu Station.
In front of the complex, a public multi-purpose government building, sports park, and cultural park are planned. Additionally, Shinsegae Department Store, Eulji University Hospital, CGV, Jeil Market, and Rodeo commercial district are conveniently accessible. For education, Uijeongbu Seo Elementary School and Daon Middle School are within walking distance, and Uijeongbu Middle School, Uijeongbu Girls' Middle and High Schools, as well as a cluster of academies, are nearby, expected to satisfy demanders with children.
Meanwhile, ‘The Shop Uijeongbu Station Link City’ is operating a model house.
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